EBA Guidelines on Loan Origination and Monitoring: estimated impacts on corporate lending in Europe
Rytkönen, Tero (2021)
2021
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2021120724048
https://urn.fi/URN:NBN:fi:amk-2021120724048
Tiivistelmä
European Banking Authority (EBA) published Guidelines on Loan Origination and Monitoring in 2020. The Guideline shall be applied from 30 June 2021 in credit institutions under European Central Bank supervision. The objective of the thesis was to find out what kind of impacts can be expected on corporate lending business in European economic area due to implementation of the Guideline. Purpose of the research was to analyse and investigate, how implementation of the Guideline may influence on lending and governance processes in point of loan origination in credit institutions in European states and institutions within single-supervisory mechanism.
Prior the final issuance of the Guidelines, EBA organised public consultation round in September 2019 and received 64 responses from stakeholders across the Europe. The researcher has performed qualitative document content analysis to the consultation letter repository and investigated, how the Guideline implementation may influence on corporate credit granting from supervised entities and other stakeholders’ point of view.
As a conclusion of the study, it seems that regulation brightens and tightens concurrently. Creditworthiness assessments should be more comprehensive and information to be collected from the borrower shall be more exhaustive than earlier. Significant investments to IT-infrastructure and enhancements for credit processes are required not depending on the size or geographical location of the institution. Moreover, the degree of sophistication in collateral valuations will be essentially higher in comparison with previously followed regulation and practises. It can be estimated that corporate lending costs will materially increase in future overall and, the impact is the most relevant on small and middle-sized businesses.
Prior the final issuance of the Guidelines, EBA organised public consultation round in September 2019 and received 64 responses from stakeholders across the Europe. The researcher has performed qualitative document content analysis to the consultation letter repository and investigated, how the Guideline implementation may influence on corporate credit granting from supervised entities and other stakeholders’ point of view.
As a conclusion of the study, it seems that regulation brightens and tightens concurrently. Creditworthiness assessments should be more comprehensive and information to be collected from the borrower shall be more exhaustive than earlier. Significant investments to IT-infrastructure and enhancements for credit processes are required not depending on the size or geographical location of the institution. Moreover, the degree of sophistication in collateral valuations will be essentially higher in comparison with previously followed regulation and practises. It can be estimated that corporate lending costs will materially increase in future overall and, the impact is the most relevant on small and middle-sized businesses.